While the computer is running, the CPU runs atomic instructions which are read from harddisk into memory (RAM), and which each manipulate a small piece of data. In accumulation these instructions lead to the result of the apparent connection of input (for example, typing the keyboard) to output (for example, displaying stuff on screen). The atomic instructions used are somewhat different for each CPU, but common desktop PCs use extensions of the x86 instruction set.
see: http://en.wikipedia.org/wiki/X86_instruction_set